Direct marketing agencies have long practiced a limited form of relationship marketing. But have we really mastered the art of treating our prospects differently than our current customers?
One thing is clear. Relationship marketing presents a huge opportunity to maximize the value of customers we've previously hooked with our lead- or order-generation creative. To get the inside scoop, I recently headed down to Washington, DC, the area where I believe the seeds of relationship marketing first took root and are currently in full bloom.
And I'm extremely happy to report to you that, more and more, a real case can be made for moving more of our clients' money out of DM and directly into RM.
First off, what is relationship marketing, and how is it different from direct marketing?
No one has to sell me on direct marketing. Whether we put our clients' money into direct mail packages, print ads, the Internet, DR radio or DRTV, virtually nothing is better at making the transaction happen.
But have you noticed how often we send out virtually the same creative — and spend the same marketing dollars — talking to our current customers as if they were strangers? That I have a mortgage and an equity loan with my current bank is visibly absent from the numerous credit card offers I receive from it. They're too busy split-testing whether I'll bite for a 4.9 percent introductory interest rate or 5.9 percent.
Relationship marketing is fundamentally different.
When done with excellence, relationship marketing strategies and creative are based on superior knowledge about the customer. We learn our customers' individual needs, desires, opinions and, most important, their long-term value. By engaging them in a mutually beneficial dialogue, we deepen their relationship with our brand even while we conduct the transaction.
How do we get this information? By asking for it! How do we use this information? With permission! Up front, we tell our customers that our intent is to meet their individual needs better than anyone else. So the privacy issue becomes a non-issue.
After living among RM experts for a while, I've discovered that a lot of people who think they're practicing relationship or loyalty marketing may not be. They're stuck in what I call, “first generation” creative techniques. The reason for this is clear: A whole industry was built on first generation creative and marketing strategies. And like mice who once found cheese in one corner of the maze, they keep traveling the same route, though the prize has long since been removed.
First generation RM creative: Dramatizing points program.
First generation RM creative may be based on a fundamentally flawed strategy. It rewards customers based on frequency, and therefore focuses on “the bribe” to build brand loyalty. Points. Double points. Triple points. Free trips. Faster free trips. And more free trips. Since the common wisdom in direct marketing has always been that “offer is king,” this is not surprising. But points programs and discounts aren't really loyalty programs at all — and you don't have to go any farther than your own wallet to prove it. How many frequent flyer programs do you belong to?
The sad fact is, as soon as one points program works, everyone jumps on the bandwagon and adopts it. Points programs compete with points programs, discounts with discounts, freebies with freebies. Some great creative work has come out of points programs, but what's the point of points programs when the competition can just give away the same or more?
Second generation RM creative: Research based.
Second degree RM creative relies on the strategic use of research-based information. By using information that applies to the vast majority of our customers — say, a common problem — we can craft impactful and relevant communications to our customers, even though they are not individualized. In fact, we can even vary our copy and creative based on particular segments of people to whom we're talking.
For example, years ago, Rogaine developed a customer retention program to help bald men regrow hair by using their product more effectively. Research disclosed that at certain points in the usage stream, men grew frustrated with the treatment and gave up — oftentimes even though the treatment was working. Why? Because they did not know the treatment was working, because the first hairs that regrew were colorless and too fine. Solution: They developed a 4-part mailing series that intervened at each of these critical junctures and helped manage the expectations of these men. By engaging customers in a relevant, ongoing dialogue and meeting their needs better they wound up with a significant ROI.
Third generation RM creative: Information Feedback.
In RM, information — rather than offer — is king. The more we know about you, the more we can meet your needs better than anyone else. Fundraisers are the masters of this. Tasked with pulling new cash from old names, they were forced to build stronger relationships with their donors. They couldn't afford to be satisfied with the 3 percent to 4 percent response rates that most direct marketers call success. So they came up with techniques that can engage upwards of 40 percent to 60 percent of their audience.
Enter the survey. Enter the workhorse. Enter the concept of asking customers for information and then strategically integrating that database information into their marketing campaigns. More important, enter a small but growing number of forward thinkers who have been saying, “Wait a minute! Can we use the same nonprofit world disciplines in the for-profit world?”
The simple technique of “feedback” of survey information was so novel in the profit world that it broke through the clutter and captured the attention of prospects and customers alike.
True to its fundraising roots, many of these initial for-profit creative efforts — while highly effective — were no raving beauties. Keep in mind, though, that fundraisers knew that donations were supposed to go to the cause, not the promotion!
Fourth generation RM creative: Customized communications
coupled with breakthrough creative.
Today, the best relationship marketing creatives have learned the lessons that direct marketers learned the hard way back in the 1980s. This is next generation RM creative. It couples customized, information-driven communications that speak directly to the one-to-one needs and desires of individual customers with all the powerful weapons in the direct marketer's creative arsenal: strong incentives, strong corporate branding, strong and emotionally impactful graphics and copy.
And it's paying off in megabucks!
A good example is Domaine Chandon of sparkling wine fame. Their Chandon Club was a social club, but they really wanted it to be a wine-buying club. They needed sales today, but they also needed to break ground so they could mine their most valuable customers for the long haul.
They began with an attractive direct mail campaign that highlighted exclusive members-only incentives — and came complete with a “pop-the-cork-to-open-the-envelope” involvement device. Inside, they not only sold wine, they engaged members in a dialogue, prompting them to return a 10-point survey describing their sparkling wine preferences and lifestyle.
This first mailing did gangbusters saleswise. But the follow-up mailing did even better. It offered customized messages and offers of particular relevance to each customer. And that's the real power of fourth generation RM creative!
So how does your RM creative measure up generationwise?
Bill Krieger is executive creative director at Direct Ink, Great Falls, VA, specializing in direct marketing and relationship marketing creative. His e-mail address is [email protected].
